{"id":361,"date":"2025-01-13T10:12:57","date_gmt":"2025-01-13T11:12:57","guid":{"rendered":"https:\/\/timsvideostore.com\/?p=361"},"modified":"2025-02-08T12:05:04","modified_gmt":"2025-02-08T12:05:04","slug":"the-cost-of-running-a-business-in-the-uk-is-rising-how-to-safeguard-your-cashflow","status":"publish","type":"post","link":"https:\/\/timsvideostore.com\/index.php\/2025\/01\/13\/the-cost-of-running-a-business-in-the-uk-is-rising-how-to-safeguard-your-cashflow\/","title":{"rendered":"The Cost of Running A Business In The UK Is Rising: How To Safeguard Your Cashflow"},"content":{"rendered":"<div class=\"booster-block booster-read-block\"><\/div>\n<p><strong>Cash flow is the money that comes into and out of your business over a certain period of time. Inflows include revenue, loans, and tax refunds, whilst outflows include supplier costs, employee wages, and rent.<\/strong><\/p>\n<p><strong>With the cost of running a business in the UK becoming more expensive due to rising inflation, you may be seeing more money leaving your business than coming in. This is known as a negative cash flow and can put your business in a poor financial position.<\/strong><\/p>\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-194306 lazyload\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" alt=\"cash inflow and outflow\" width=\"750\" height=\"1061\" data-src=\"https:\/\/timsvideostore.com\/wp-content\/uploads\/2025\/01\/cash-inflow-and-outflow-724x1024-1.png\"><\/p>\n<p style=\"text-align: center\">(Image Source: <a href=\"https:\/\/eswap.global\/cash-outflow-problems\/\">eSwap<\/a>)<\/p>\n<p>Previous research estimated that around<a href=\"https:\/\/assets.publishing.service.gov.uk\/media\/65df15d2b8da630f42c86223\/the-prompt-payment-and-cashflow-review-2023_.pdf\" target=\"_blank\" rel=\"noopener\"> <span style=\"font-weight: 400\">50,000 small and medium enterprises (SMEs)<\/span><\/a> in the UK go out of business each year due to cash flow issues.<\/p>\n<p>If you have a negative cash flow, you may also be at risk of going out of business. This is because if you struggle to pay your bills, you will be subject to late fees and likely to damage your relationships with your suppliers.<\/p>\n<p>Luckily, this article will explore seven tips to safeguard your cash flow so that you don&#8217;t go out of business in 2025 and beyond.<\/p>\n<h2><strong>5 Tips For Safeguarding Your Cash Flow\u00a0<\/strong><\/h2>\n<h3><b>1. Reduce business expenses where possible\u00a0<\/b><\/h3>\n<p>In a recent survey, energy costs, supplier expenses, fuel prices, business insurance, and rent were among the top inflationary factors impacting UK businesses. These rising expenses have led to negative cash flow for <a href=\"https:\/\/www.leasinglife.com\/comment\/the-rising-cost-of-doing-business-in-the-uk-a-snapshot-of-sme-financial-strain\/\" target=\"_blank\" rel=\"noopener\">56% of the surveyed businesses<\/a>, highlighting the need to reduce these expenses where possible.<\/p>\n<p>Here are some business expenses that you should try to reduce to help save money and safeguard your cash flow:<\/p>\n<ul>\n<li><b>Rent and utility bills.<\/b> With energy bills and rent rising significantly, consider introducing remote and hybrid working options for your employees, if appropriate for your business. This reduces the time employees spend in the workplace, which can reduce energy bills and allow you to size down to a smaller business premise with cheaper rent.<\/li>\n<li><b>Office supplies. <\/b>Remote and hybrid working options for your employees also reduce the amount you need to pay for office furniture and supplies such as stationery, printers, and papers.<\/li>\n<li><b>Employee expenses.<\/b> Reducing employee expenses, especially the use of a business car among rising fuel costs, can safeguard your cash flow. In addition, it is a good idea to ask employees to check with the business before making purchases so you can keep tabs on expenditures.<\/li>\n<li><b>Business insurance. <\/b>When your insurance is set to renew, shop around for providers with lower rates or better offers before allowing it to renew automatically. Also, consider speaking to your current provider about any discounts they can offer for staying with them.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>While the government&#8217;s <a href=\"https:\/\/www.gov.uk\/guidance\/energy-bill-relief-scheme-help-for-businesses-and-other-non-domestic-customers\" target=\"_blank\" rel=\"noopener\">Energy Bill Relief Scheme<\/a> is committed to supporting UK businesses with rising energy costs, it may be worth checking to see if other energy suppliers can offer your business lower rates.<\/p>\n<h3><b>2. Make it easy for customers to pay<\/b><\/h3>\n<p>Being paid on time can help safeguard your cash flow, so it&#8217;s best to make it easy for customers to pay your business.<\/p>\n<p>Firstly, ensure your payment details are correct on your invoices so customers are sending their payment to the right place. Also, make sure the payment terms are clear, including the date to receive payment or the interest you charge for late payments.<\/p>\n<p>You can also make it easier for customers to use their preferred payment method if you <a href=\"https:\/\/www.eposnow.com\/uk\/resources\/accept-payments-online\/\" target=\"_blank\" rel=\"noopener\">start taking online payments<\/a>. Debit cards are the UK&#8217;s most popular payment method, representing more than half of transactions, and digital wallets such as ApplyPay and GooglePay are also preferred.<\/p>\n<p>Late payments are likely to negatively impact your cash flow. So, use an online accounts system to keep track of your debtors and don&#8217;t be afraid to follow up with those who owe you money. It&#8217;s likely to be more effective if you contact them via a phone call rather than an email.<\/p>\n<p>In addition, consider <a href=\"https:\/\/www.techgliding.com\/2021\/09\/ways-ai-can-help-automate-expense.html\" target=\"_blank\" rel=\"noopener\">automating your invoices<\/a> so they are sent to customers as soon as a purchase is made. This will decrease the wait time for your payment.<\/p>\n<h3><b>3. Don&#8217;t tie up all your cash in assets<\/b><\/h3>\n<p>An asset is anything your business owns that has economic or market value. This could be your company cars, warehouse machinery, office printers, and office furniture.<\/p>\n<p>Consider renting or leasing this type of equipment rather than buying it. Whilst this may seem more expensive up front, at least you won&#8217;t have your cash tied up in assets.<\/p>\n<p>In addition, try not to have too many employees on your payroll. Whilst employees aren&#8217;t assets, <a href=\"https:\/\/sparemytime.com\/blog\/2023\/08\/18\/48-of-uk-companies-outsource-work-in-2023-with-an-increase-of-41-since-the-pandemic\/\" target=\"_blank\" rel=\"noopener\">outsourcing<\/a> or using subcontractors may be more cash efficient and give your business flexibility at quieter times.<\/p>\n<h3><b>4. Pay suppliers at the right time<\/b><\/h3>\n<p>It&#8217;s crucial to find the exact right time to pay your suppliers if you want to safeguard your cash flow. The quicker you pay them, the quicker the cash leaves your account.<\/p>\n<p>However, it is likely to harm your relationship with suppliers if you pay them late. It&#8217;s essential to maintain a good relationship with suppliers so that you can continue trading with them and, if needed, lean on them for extended payment terms.<\/p>\n<h3><b>5. Manage your inventory<\/b><\/h3>\n<p>Selling your inventory to customers generates a cash inflow through revenue, but purchasing the inventory (or the supplies) requires a cash outflow.<\/p>\n<p>Luckily, effective inventory management will help you avoid overstocking. Too much stock can be a liability if customer demand for a product drops, as your cash flow statement will indicate that you have purchased more products than you have sold.<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" class=\"wp-image-194307 aligncenter lazyload\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" alt=\"Overstocking and understocking\" width=\"750\" height=\"750\" data-src=\"https:\/\/timsvideostore.com\/wp-content\/uploads\/2025\/01\/Overstocking-and-understocking.png\"><\/p>\n<p style=\"text-align: center\">(Image Source: <a href=\"https:\/\/cashflowinventory.com\/blog\/overstocking-and-understocking\/\" target=\"_blank\" rel=\"noopener\">Cash Flow Inventory Blog<\/a>)<\/p>\n<p>If you do have overstock, consider putting the items on sale or offering your customers discounts so that the stock will clear, and you&#8217;ll earn some cash.<\/p>\n<h2>Be Ready To Safeguard Your Cash Flow As Business Costs Rise<\/h2>\n<p>If you have followed the seven tips explored in this article and your cash flow is still negative, then consider looking on the<a href=\"https:\/\/www.gov.uk\/corporation-tax-rates\/allowances-and-reliefs\" target=\"_blank\" rel=\"noopener\"> government website<\/a> to see if you are entitled to tax reliefs and breaks.<\/p>\n<p>The final advice I can give you is to focus on lowering your margin. The margin is the difference between the price you sell a product and the costs associated with making or selling the product. To safeguard your cash flow, you must try harder to lower the margin and increase your profit.<\/p>\n<p>Remember that public companies must report their cash flows on their financial statements.<\/p>\n<p>&nbsp;<\/p>\n<p>The post <a rel=\"nofollow\" href=\"https:\/\/realbusiness.co.uk\/cost-running-business-uk-rising-safeguard-cashflow\">The Cost of Running A Business In The UK Is Rising: How To Safeguard Your Cashflow<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/realbusiness.co.uk\">Real Business<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cash flow is the money that comes into and out of your business over a certain period of time. Inflows include revenue, loans, and tax refunds, whilst outflows include supplier costs, employee wages, and rent. With the cost of running a business in the UK becoming more expensive due to rising inflation, you may be [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":363,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[11],"tags":[],"_links":{"self":[{"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/posts\/361"}],"collection":[{"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/comments?post=361"}],"version-history":[{"count":3,"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/posts\/361\/revisions"}],"predecessor-version":[{"id":366,"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/posts\/361\/revisions\/366"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/media\/363"}],"wp:attachment":[{"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/media?parent=361"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/categories?post=361"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/timsvideostore.com\/index.php\/wp-json\/wp\/v2\/tags?post=361"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}